Do you want in?
Here are some of my own personal tips that I followed with success in January:
- Have a budget. We have a budget set already for all monthly expenses (tithes, mortgage, utilities, etc). All expenses budgeted for cash payments went into an envelope labeled for that expense. I actually utilized Dave Ramsey's “Envelope System” here.
- If you need some ideas on how to start this, check out MoneySavingMom's “Budgeting 101” post on this. It is very helpful!
- Stick to your budget. Use cash the entire month for expenses like groceries, clothes, allowance, etc. Obviously, if you have bills being paid from your checking account, you won't use cash for those expenses.
- Our budget for groceries each week is $100 (for our family of 5 – that includes our infant's formula and food). During my cash-only diet in January, I withdrew that money out of the bank each week and had it on hand at all times. I knew I couldn't spend anymore than that each week. Some weeks I had extra and I could roll it over for the next week (or use it on other things we needed). This month, however, I am going to be “gazelle” intense (that's a Dave Ramsey phrase). Whatever is remaining at the end of each week in any envelope will go directly back into that same envelope to be used for the following week (to the penny). The envelope will stay in our hiding place (no, not under our mattress like Mr. Krabs) so I'm not tempted to use it for my Starbucks. We have an allowance budget, but when my allowance is gone (I say “my” because I'm the only who takes it), I can't go looking at my remaining grocery money for a quick java fix!
- Unexpected expense requires creativity! Try to find another envelope or category that you can utilize the monies from if an unexpected expense does come up. I tend to always go to our grocery budget because it is the one that's the most variable. I'm not going to use that extra money whatsoever this month. I'll have to be creative if this happens to us.
- Absolutely no using credit cards. The point of doing this cash-only diet for me is to challenge myself to see how much I can save by not using your credit cards. That extra savings will be applied to our financial goals for 2008! The philosophy some people have on credit/plastic is that you are more apt to take the purchase more serious when using cash. I do take every purchase our family makes serious. But, I do tend to think a Starbucks here and a Starbucks there isn't a big deal…until that Starbucks cost me like $40 bucks and, well…I could have fed the kids on that for a week!
- Now, if you're like my pal, Carrie, she uses her cards to benefit her in every single transaction. She talks about her gas credit card to give her cash back on her gas card purchases, the same with her utilities. She wrote up a great post on that here. I like her advice too – she pays them off each month since she doesn't want to pay that interest (who does??). This is so smart and I hope to get to that place by the end of the year (my financial goals and all). Of course, you would never hear Dave Ramsey agree. But, if you're gonna spend the money, you may as well make some money in the long run if you can. If you're doing this smart, like Carrie, and want to be safe (and have fun in this challenge), maybe transfer the money you charged into to your savings so you know it's gone. I've done this before because I want the debit in my checking account to know that the money is earmarked for something.
- Share the challenge with friends! In January, I told my friend Lisa about my cash-only diet, and my desire to not spend money. She shared she was interested in doing the same. So, she invited us over one night just to hang out, and we made pizza and had snacks. We spent no money on the evening together with friends and we had fun! The more your friends are aware of your goals, the more they help you achieve them and hold you accountable (and maybe they'll want in too).
- Make SMART goals for yourself. I talked about setting SMART goals before here. Make sure these tips I've used for myself are realistic for you. If you can only go one week, try that. Maybe this month is just bad all together because something personal is going on for you. If you won't stick with this challenge this month, commit to a different month.
So, that's my challenge to myself this month. If you want to join, SWEET! Leave me a comment and let me know You're IN! If not, just cheer those of us who are going to be challenged during the month. If April is anything like January was for us, we were so excited about the accomplishment and the money that we saved by going on our cash-only diet!